The New Jersey Department of Health and Senior Services has awarded $44 million in Health Care Stabilization Fund grants to six financially distressed hospitals in order to maintain health care access in communities where services are threatened, Health and Senior Services Commissioner Heather Howard announced today.

“The Health Care Stabilization Program was designed to provide temporary funding to hospitals that are the health care safety nets of their communities,’’ said Governor Jon S. Corzine. “During one of the worst economic downturns in our nation’s history, it is essential that the state provide assistance to ensure access to health care services for our most vulnerable residents. At a time of scare resources, this important program is carefully crafted to ensure accountability and transparency for all taxpayers.”

The grants, which range from $1 million to $22 million, provide funding to hospitals facing closure or significant cuts in health care services. The six grantees were chosen from among 13 hospitals that applied.

Extraordinary circumstances created the need to stabilize health care services in the community

The hospital serves a significant number of uninsured, underinsured and/or Medicaid patients

The hospital has demonstrated efforts to make efficiencies and improve facility management and governance

Description of how services will be maintained after June 30, 2009

In addition to the quality and efficiency conditions attached to the grant, the DHSS, in consultation with the State Comptroller, will require each facility to complete an audit to evaluate whether a grantee’s use of the funds was consistent with the provisions of statute, regulations, and any conditions imposed upon the award of the grant. The DHSS will also report to the Legislature annually to identify the facilities that received grants and the purpose for which the grant was allocated to the facility.

Hospitals awarded stabilization grants must meet certain conditions in order to receive the funding. Facilities will be required to document progress on operational performance and quality measures; enrollment procedures for Medicaid and NJ FamilyCare; contract with a firm that specializes in improving revenue collection; and include a state representativeon the hospital board for the duration of the grant. In addition, each grantee is required to meet hospital-specific quality and efficiency conditions in order to receive funds for the duration of the program.

“These critical conditions are designed to improve quality and efficiency, and ensure accountability for how the funding is spent,” said Commissioner Howard. “The state has a responsibility to the taxpayers to ensure that all public dollars distributed to hospitals are spent as efficiently as possible.”

Hospitals will begin receiving payments after they submit plans outlining how the conditions of the grant will be met. Hospitals will receive monthly payments through June 2009.

New Jersey hospitals received $2.9 billion in charity care and Medicaid payments last year.

Grant applications were reviewed by a team from the DHSS in consultation with the Health Care Facilities Financing Authority and the state Department of Treasury as required under the legislation Gov. Corzine signed into law last June.

The legislation that created the fund was part of a package of health care reforms recommended by the Commission on Rationalizing Health Care Resources, which issued its final report last January. The report demonstrated that a large number of New Jersey hospitals are in poor financial condition.

As part of the reforms recommended by the Commission and signed into law by Governor Corzine this August, the DHSS has been monitoring the financial condition of hospitals more closely and is implementing an early warning system that will enable the state to intervene earlier when a hospital is in crisis and work with hospitals to look for opportunities to restructure services and improve operations.

“The reforms enacted by Governor Corzine give the Department the tools it needs to stabilize New Jersey’s hospital system and implement strategic planning rather than move from one crisis to the next,’’ Commissioner Howard said.

Other hospital reform measures signed into law by Governor Corzine ensure that uninsured working families are not overcharged for critical hospital care; require hospitals to conduct an annual public meeting to improve communication and transparency between hospital leadership and the community it serves; and require all hospital board members to complete a comprehensive training program designed to improve hospital governance and oversight.